Television set for a revolution

About 90 percent of Americans pay for television, giving them scores of channels to choose from, but four free-to-air networks they can pick up with a “rabbit ears” aerial still account for 96 of the top 100 primetime programs. Audience inertia and brand loyalty built over decades mean that ABC, CBS, Fox and NBC still account for 40 percent of all primetime viewing. Their unique ability to attract mass audiences, particularly for live sport, has kept TV advertising healthy even as advertising dollars fled other media for Google and Facebook.

Broadcasters once offered signals to cable, satellite and telecoms groups for free, in exchange for perks such as prominent positions in their onscreen channel listings. In the past five years, however, their business has been transformed as they discovered they had the power to demand that distributors pay to retransmit their programming. This has created a second revenue stream of “retrans” fees worth more than $2 billion a year, which could jump to $12 billion, says Rich Greenfield, a BTIG Research analyst. “It’s a good gig if you can get it,” Verizon’s Lowell McAdam remarked this week. Yet three of America’s biggest broadcasters said they might give that gig up. The broadcasters claim Aereo violates copyright by rebroadcasting signals without consent. Aereo claims it has simply invented a more convenient form of rabbit ears, and says having a TV aerial is every American’s right. Behind the posturing, the legal dispute hinges on whether Aereo’s streaming counts as a public or private performance of copyrighted content. Two New York courts have sided with Aereo, but further legal battles lie ahead – possibly all the way to the Supreme Court. A courtroom loss would sink Aereo.